Prosecutors on Wednesday raided the home and office of Choi Eun-yeong, former chairwoman of Hanjin Shipping Co., on suspicion that she and her daughters sold their company stocks by engaging in insider trading days before the company's application for creditor-led debt restructuring, industry and prosecution sources said.

The raid was carried out by prosecutors and investigators from Seoul Southern District Prosecutors' Office, they said, adding the case has been transferred to prosecutors from the Financial Services Commission (FSC).

Earlier in late April, FSC investigators questioned Choi at her office in Yeouido, Seoul, about the reasons behind her family's sudden decision to dispose of the Hanjing Shipping stocks.

At that time, the FSC investigators secured Choi's mobile phones, computers and relevant documents for further investigation into the controversial stock sale, while simultaneously questioning some Hanjin Shipping officials suspected of leaking company information to the former chairwoman.

According to a regulatory filing, Choi and her two daughters sold their all of 0.39 percent stake, or 669,248 shares, in South Korea's biggest container carrier between April 6-20.

The controversial stock sale was completed two days before Hanjin Shipping, long troubled by an industry slump and ballooning losses, decided to apply for a creditor-led debt revamp and a self-rescue program. Choi's family is estimated to have avoided some 1 billion won (US$877,000) in losses.

Under the current law, executives, staff members and major shareholders of a company are deemed "insiders" who are banned from using undisclosed information. Violators could face a prison sentence of up to 10 years or a fine that amounts to three times the amount of gains or losses avoided.

Currently, Choi is the chairwoman of Eusu Holdings Co. that separated from Hanjin Group in May last year. (Yonhap)